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Enbridge and ExxonMobil Pipeline Company Announce Joint Effort on New Oil Sands Pipeline

Enbridge pipeline map. Dashed green line shows rough location of proposed new pipeline. Click to enlarge.

Enbridge Inc. and ExxonMobil Pipeline Company have agreed to jointly assess the commercial development of a new pipeline project to transport crude oil from Patoka, Illinois to Beaumont, Texas, and onward to Houston.

The new pipeline would link Enbridge’s system—which has been expanding to handle the increasing demand for Canadian syncrude from the oil sands—to the refineries on the US Gulf Coast. The pipeline would be the first effort by a major US oil company to venture into transporting oil from the Alberta oil sands reserves thanks to ExxonMobil’s existing right of way, which stretches from Cushing, Oklahoma to Nederland, Texas. Enbridge owns the rights of way from Cushing to Patoka, Illinois.

The two companies plan on transporting 400,000 barrels of oil per day to refineries in Texas and say the pipeline will be online by 2010, just one year after TransCanada’s 400,000 barrel per day oil line will be pumping Canadian oil to Midwest refineries.

The Alberta Clipper project. Click to enlarge.

Enbridge is already at work on what it calls the Alberta Clipper project—a crude oil pipeline providing service between Hardisty, Alberta, and Superior, Wis. This 1,000-mile/1,607-km segment is designed to resolve expected capacity constraints and is expected to be in service by mid-2010, after the Southern Access program is completed and as crude oil supplies from Western Canada continue to increase. Initial capacity will be 450,000 barrels per day (bpd), with ultimate capacity of up to 800,000 bpd available.

Enbridge’s Southern Access program is a three-stage expansion of the pipeline system to provide incremental capacity to Chicago, southern Illinois and other markets to meet customer demand.

The Southern Access Expansion. Click to enlarge.

Construction of stage 1 of the Southern Access program is underway on 321 miles of new pipeline along the route of Enbridge Energy Partners’ Lakehead System in Wisconsin and construction of additional pump stations. Stage 1 is scheduled for construction in 2006-07 and to begin operation in 2008.

Stage 2 consists of the construction of approximately 133 miles of new pipeline from Enbridge’s Delavan pumping station near Whitewater, Wis., to its Flanagan terminal near Pontiac, Ill., where it will connect with Enbridge’s Spearhead System west of Chicago. Most construction will be in 2008, and operation will begin in spring 2009.

The Southern Access Extension will extend the system from its Flanagan terminal south to the petroleum transportation hub in Patoka, Ill. This system also will be constructed in 2008 and begin operation in 2009.

Patoka, as noted above, is the origin of the proposed Enbridge-ExxonMobil pipeline that would then carry the syncrude from the oil sands down to the Gulf Coast refineries.

Enbridge and ExxonMobil Pipeline have been in discussions with potential shippers of Canadian crude about the scope, timing, and value of the new project. The companies say that shipper interest and input will help guide the development of the project. A number of potential transportation solutions are being assessed and the specifics of the proposed project would be based on the final economics and shipper support.

Enbridge operates in Canada and the United States the world’s longest crude oil and liquids pipeline system.

Growth in oil sands greenhouse gas emissions under new Canadian government targets. Click to enlarge.

Separately, a just-released report by the UK’s Tyndall Centre for Climate Change Research concludes that Canada will fail to achieve its Kyoto targets due to the proposed expansion of its oil sands resources in Alberta. The report—Climate Change Policy and Canada’s Oil Sand Resources—was commissioned by the environmental organization WWF.

The report calculates that CO2 emissions generated through oil sands production will double by 2012, whereas they need to be halved.

The Canadian government has proposed mandatory CO2 intensity targets for oil sands which consist of reducing emissions by 15% from a 2006 baseline to 2012. However there is no limit on the amount of production, and the analysis shows that if the projected expansion of production occurs, greenhouse gas emissions will more than double during this period. There will be no stabilization of greenhouse gas emissions from oil sands.

Additionally, the report calculates that oil companies could actually make money under the new target system. The inadequacy of the intensity targets creates a perverse subsidy, which means that industry could make between C$300-700 million from selling emissions credits, just by delivering planned efficiency improvements.




Is this the best use of huge amounts of capital? If the U.S. uses 20 million barrels of oil per day and this supplies 400,000 barrels per day, that is 2% of our daily consumption of oil.

We could save more than that through conservation and energy efficiency measures. Then use that capital to advance cellulose ethanol at an accelerated rate and not produce all the CO2 from burning the NG to turn tar sands into oil.


Oh well, that would be a question for their stockholders. I don't see any government money in here.


I don't see any government money in here.

Direct? Porbably not. But that industry profits more handsomely than any other from government subsidies - both direct ones and indirect ones from policy decisions.


sj was that a joke, use the capital for ethonal research. Obviously you don't have much business training.


Bleh. Same old BS business as usual. I wish these dinosaurs would hurry up and die.


Whats "green" about oil sands again?


The US currency used to pay for the oil is green.

Hmm, what else - the plants cleared away with the overburden?

Or think of it this way - Mother Nature has this huge toxic waste site (aka 'oil sands') that we are helping to clean up in an economically advantageous fashion!!



If you think the risky scheme of cellulosic ethanol R&D will yield better returns than the oil pipeline, feel free to invest your own money in it.

Or - if that drive to control others money or choices won't go away - you'll need to either become a mutual/hedge fund manager or an elected government official.

When you ask 'Is this the best use...' the assumptions are more significant than the written portion of your question. Best for who? By what measures? Profitability is an important measure - without it productive companies don't remain in business over the long term.


Which is better?
Dirty Canadian oil sands or politcally mucky middle eastern oil?
Obviously alternatives are, but we'll still need dino oil to develop the alternatives and related infrastructure. With hardline conservation methods, we could illiminate one of them, not both. So which is worse?


Those are the only two choices we have? I think we have many more choices than these.

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